The baldwin company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. the expected salvage value at the end of 15 years is $4,090,000. what will the book value of this purchase (exclude all other plant and equipment) be after its third year of use? (use fasb gaap) select: 1save answer $33,538,000 $35,446,667 $32,720,000 $29,448,000

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Business

Rivera

4 April, 09:16

The baldwin company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. the expected salvage value at the end of 15 years is $4,090,000. what will the book value of this purchase (exclude all other plant and equipment) be after its third year of use? (use fasb gaap) select: 1save answer $33,538,000 $35,446,667 $32,720,000 $29,448,000

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Uriah Liu · Answer 1

To get the book value (BV) at the end of 3rd year, let us determine 1st the depreciation:

depreciation = ($40,900,000 - $4,090,000) / 15 years

depreciation = 2,454,000 / year

The reduction after 3 years is:

depreciation (3years) = ($2,454,000 / year) * 3 years

depreciation (3years) = $7,362,000

Therefore BV after 3 years is:

BV = $40,900,000 - $7,362,000

BV = $29,448,000